Does Having a Secured Credit Card Help Your Credit

Does Having a Secured Credit Cards Help Your Credit?


If you have bad credit or no credit, then it can be frustrating to not be able to lay your hands on a credit card. There’s not much you can do unless the situation becomes better. A secured credit card can help your credit score by quite a bit. It may actually be the only option for you out there if you need a line of credit but your credit score does not allow it.

Is a secured credit card right for you?

The truth is that secured credit cards may not be the right option for anyone and everyone. But whether or not they are right for you and your situation is what you should be considering. The main difference between an unsecured and a secured card is that the second type will need a money deposit from you as cardholder. This will act as collateral if you default on your payments. If your credit score is bad, little or non-existent, you will very probably be denied an unsecured credit card. But getting an unsecured credit card will not be a problem because basically you are taking on the risk by putting in a money deposit with the institution. This can be a really great option for you if you are just starting out in life and it is the first time you will be handling your own credit. It also works if you have been really bad with credit in the past and need to learn good money behavior. With low credit limits and a deposit from your own pocket, you will be able to have access to a card that teaches you good money management.

Using a secured credit card to improve your credit

There are ways in which you can use your card to improve your credit score. It is a long process, but if you are careful, you can do it.

  • It is extremely important to make your payments on time. If you have bad credit or no credit, good credit behavior will improve your credit score. It is essential to remember not to purchase things that you really can’t afford because then you will just have balances left on your card, which will do nothing other than lower your score.
  • Use your card responsibly to build your credit history. Show that you are responsible with your card. For example, shop for groceries or buy gas with it, and then pay off the balance in full at the end of the month. This will enable you to build a history that is positive and reinforcing.

There is a reason why you are not able to let your hands on an unsecure credit card. Secured ones put the onus on you to make payments on time. If you don’t, the company will dip into your deposit to make up for late or no payments. Being careful and paying off all balances is a great way of building your credit.